04 Oct What Women Entrepreneurs Need to Know about Financing
Getting financing can be a challenge for a business owner, man or woman. But more so, if you’re a woman. And that’s not just a perceived inequity; it’s an undeniable fact.
“In 2014 the House Subcommittee on Small Business and Entrepreneurism published a report that said only 4% of the total dollar amount of business loans go to women-owned businesses,” says Peter Bolin, analytics expert.
Four percent – in spite of the fact that women-owned businesses account for more than 30% of all businesses in the country, generate over 1.5 trillion dollars in revenue and employ nearly 8 million people nationwide.
Overcoming the financing obstacles women entrepreneurs face
Exploring the reasons – cultural, societal, economic – for the challenges women often face in getting business loans is a topic more for a book, than a short blog like this one. For now, let’s look instead at a few things that can increase the odds of getting business financing.
Network within your business community – Get to know the “movers and shakers” in your business community and let them get to know you. Start by joining small-business support groups. Learn from the experiences of others. Connect with the business development center in your area. People in these organizations often work with lenders and are willing to put in a good word for a loan applicant they know to be a go-getter with a solid business plan. An applicant who might otherwise be turned down due to things like lack of collateral or not enough time in business.
Research – These days, banks loans for all small businesses are notoriously difficult to get. But if you decide to defy the odds and try for one, it’s a good idea to do some initial research into that bank’s loan requirements and also the types of businesses they typically fund. No sense wasting your time if, for instance, they specialize in financing high-tech start-ups, and you have a sure-fire idea for a high-end boutique. Or maybe small retail stores are the focus of their business lending, but you create software for the biotech industry. Research will save you time and disappointment.
Be prepared – Having your tax returns, profit-and-loss statements, and other financial documents organized and accessible can serve not only to expedite the application process, but also make a case for your credit-worthiness. In that same vein, get a copy of your credit report before you apply. And make sure there are no inaccuracies that could work against you.
Explore your options –These days,business owners – men and women alike – hear more “no’s” than “yes’s” from traditional lenders like banks. That’s why, more and more, they’re turning to alternative online lenders to get the financing they need, quickly and without a lot of hoops and hassles.
The proprietary software used by alternative lenders – like Quote 2 Fund – in evaluating applications takes into account all kinds of data. And it doesn’t care if your first name is Jennifer or Jon.
Finding a way
For whatever reasons, women entrepreneurs traditionally have had a harder time getting financing for their businesses. Yet, since 2007 the number of women-owned businesses has grown 68 percent, compared with 47 percent for all businesses – a fact that says a lot about the resourcefulness of women entrepreneurs and the changing landscape of business lending.